Property rights & the Roberts Court

In an article published today by Engage, PLF attorneys Brian T. Hodges and Christopher M. Kieser consider the U.S. Supreme Court’s most recent property rights case, Horne v. United States Department of Agriculture, in the context of the Roberts Court’s property rights jurisprudence.

Spoiler alert: the Court’s track record is better than you’d think.

As you may recall, earlier this year the Supreme Court of the United States ruled in favor of Fresno-area raisin farmers Marvin and Laura Horne, concluding that a program requiring raisin growers to hand over up to half of their annual crop to the government violated the Takings Clause of the Fifth Amendment. The dispute in Horne arose from some questionable New Deal-era regulations designed to prop up the price of crops by preventing farmers from bringing their entire harvest to market. The Hornes balked at government demands that they forfeit up to 47% of their raisins without compensation, and in response the Department of Agriculture slapped them with almost $700,000 in fines and penalties. After over a decade of litigation, including an initial trip to the Supreme Court in 2013, the Hornes prevailed.

The decision is particularly notable in that it continues the Roberts Court’s promising trend toward a pragmatic and property rights oriented interpretation of the Takings Clause. Indeed, Horne opens with Chief Justice John Roberts, writing for an eight justice majority, explaining that the Takings Clause protects personal property, like raisins, to the same extent as real property. The principle that “property” refers equally to real and personal property “goes back at least 800 years to Magna Carta, which specifically protected agricultural crops from uncompensated takings.” The government must, therefore, pay just compensation if it appropriates raisins, just as much as if it physically seizes a home. Because the Hornes were required to hand over their raisins, the Court concluded that the government’s demand was a “clear physical taking.”

Justice Roberts rejected the government’s argument that it could avoid a taking by offering to pay the Hornes something in the future based on the government’s eventual use of the seized raising. Again, eight justices agreed that because the raisin reserve requirement operated by taking the Hornes’ property in the first instance, the fact that the owners could later receive some money (or not) for the seized property was irrelevant to the question whether a taking had occurred. In any case, the Court noted that oftentimes raisin farmers received nothing in return for “contributing” to the government’s raisin reserve. Thus, the Court held that any residual value given to the Hornes could offset, at most, its obligation to compensate the Hornes—it could not change the fact that a taking had occurred.

Justice Roberts next rejected the claim that the raisin reserve requirement was a permissible condition on the right to sell raisins in the stream of commerce, analogous to the type of land-use exaction held unconstitutional by the Supreme Court in Koontz v. St. John’s River Water Managment District. The Chief Justice roundly criticized the government’s assertion that the Hornes could have avoided the taking by simply not selling raisins, saying that “‘[l]et them sell wine’ is probably not much more comforting to the raisin growers than similar retorts have been to others throughout history.” As Justice Roberts recognized, the right to sell a product on the open market is not a government benefit subject to government controls—it is a constitutionally protected right. Otherwise, nothing would prevent a government agency from requiring a car manufacturer to give the government every fifth car that comes off its assembly line, in exchange for the privilege of selling cars at all.

The justices divided 5-3-1 over the question of remedy. Five justices, led by the Chief Justice, pragmatically concluded that the case could be finally decided on the record because the government had already determined the value of the raisins when it assessed penalties against the Hornes. Thus, there was no need to send this decade-old case back for further litigation—the Court invalidated the fines and penalties, making the Hornes whole again.

In a separate opinion written by Justice Stephen Breyer, three justices agreed with the majority’s takings analysis, but would have remanded this case to the lower courts for a calculation of compensation. In Justice Breyer’s view, the Hornes should have had to comply with the reserve requirement and then seek just compensation afterward. If it turns out that the reserve requirement was more beneficial to the Hornes than the value of the raisins they had to surrender, they may not be entitled to any compensation. But, as the majority wrote, there is no authority for the proposition that “general regulatory activity such as enforcement of quality standards can constitute just compensation for a specific physical taking.”

Importantly, the Chief Justice noted that the constitution “is concerned with means as well as ends. The Government has broad powers, but the means it uses to achieve its ends must be consistent with the letter and spirit of the constitution.” Thus, the Hornes were entitled to prevent the taking from occurring in the first instance—they did not have to subject themselves to an unconstitutional demand only the see if the regulatory program provided them with any benefits that could offset the government’s liability.

The Hodges & Kieser article observes that

Horne II provides more precedent supporting the recently reinvigorated unconstitutional conditions doctrine. But, perhaps more important to the big picture, the Horne decisions continue a trend of the Roberts Court—support for clear, administrable rules that benefit property owners at odds with powerful government agencies. That is in stark contrast with the final term before the Chief Justice joined the Court, which included the infamous Kelo v. City of New London decision upholding a forced transfer of a private home to a corporation.